Is China’s Tuangou or “Team Buying” Concept the New Social Networking Hub?

So… you see a new car that you want, but it’s a little out of your price range. Of course, you’d be willing to negotiate if you knew the dealer would give you a fair but reasonable price. Do you go for it, haggling him down to a number that you can comfortably afford? If you decide to pursue it, you might well get it – – and a few hundred of your friends might decide to join you.

Some of China’s consumers actively participate in huge team buying clubs called “tuangou’s” where they negotiate, haggle and convince retailers to lower their merchandise to a more affordable price. In the process, the consumer’s success means success for the entire group. The team buying concept that they practice demands that the retailer honors ALL participants of the group by giving them all the same fair price. For example, that means if you negotiate a couch from $1500.00 down to $500.00, the retailer will sell the couch to all members of the team for $500.00. It’s a win-win situation for both parties and a huge boost in confidence for the consumer!

China’s bartering teams or “tuangou” emerged in force over five years ago. The concept has taken off well, becoming quite popular and more preferred by Chinese consumers than going it alone with retailers. Also growing are the numbers of forums and web sites where these consumers meet, talk and strategize about their next planned purchase and buying power, where they also select a leader and determine what amount they are willing to pay – or not pay – for the item they all want.

Retailers closely monitor sites like Qeeka.com, and other consumer forums and chat rooms to see what people are buzzing about. They plan their own sales and marketing strategies based on the information they get from these sites. They prepare to do negotiation battles with the tuangou.

Social networks are quickly cropping up on Facebook with friends clusters who are banding together with their efforts. The largest Facebook friends network, Twangu, currently has over 1,000 users in its network. Almost in an eBay fashion, the portal is set up so that retailers have the opportunity to find customers and vice-versa.

(From Twangu’s Facebook page:)

Get volume discounts for the stuff you want by shopping as a team! Build your shopping team and watch thousands of vendors bid on our team’s business.

How does it work?

1. User A sets up a group buy and the terms of the buy

2. User B-Z joins the team

3. Twangu makes the team official and sends it out to vendors

4. Thousands of vendors freak out and bid on the business

5. Low vendor bid wins!

The bigger the shopping teams, the bigger the savings. Forget the other auction sites, and start Twangu’ing!

The potential for the group to grow is exponential on a social networking site like Facebook, but add to that the inviting addenda of bargain hunting, saving money and deal finding and the potential becomes even greater. The power of social networking with this type of audience can be quite influential. What retailer would NOT want to be invited in or pitched against in pursuit of the best (or fairest) price?

Do you think the social networking platform in this concept is going to only be successful in China? Do you think it could thrive and do well in any other country?

Several companies have tried to start group buying sites in America and Europe yet most of them failed due to a sheer lack of interest from consumers. The owner of StoreMob.com didn’t think so, after the idea didn’t go over well with the Americans or the Europeans.

“I had read about it in China and thought maybe it would work over here, but it didn’t work out too well,” said Eliot Sykes, founder of UK-based StoreMob.com, which is now inactive. “I am not sure people’s attitudes over here are right for it.” (CNN news article)

Why is that, do you think? A lack of interest? Too much (or not enough) competition? Perhaps not enough social media exposure?

I think that social media and social networking is the perfect platform to bring attention to a concept that sounds phenomenal. After all, social networking is based on the premise of establishing relationships, sharing information, giving advice, learning from mistakes, celebrating, sharing and creating. That’s what we all do on Facebook and Twitter, isn’t it? Share information, give warnings, advice, etc. Wouldn’t it then be befitting that a place where social networkers join forces and participate in an action that benefits them all, that it would almost guarantee success?

I am a freelance writer, blogger and professional motivational speaker. I primarily focus on business content, offering my clients strategic marketing strategies for their businesses. I have been an entrepreneur for over 13 years, after having worked extensively in corporate America.

For Toronto readers, webpiggy.com is an example of the evolution of this concept into North American markets.

Will the idea go viral? I think that’s an understatement- I postulate that the idea, once it’s had time to evolve and portable technology catches up (ie. everyone has an iphone-like device) will become one of the primary ways to market online. Think about it- there could reasonably be a website for every town that local businesses could utilize for advertising and local buyers (and tourists) could use a wealth of apps to acquire the deals… I definitely think the concept will mutate into many variations and change the market!

Hi Herb – thanks for sharing the example of webpiggy, that looks interesting; I hope it works out for you. And I think your point about a local site for local businesses is a good one. Planning to franchise?

Launched in Raleigh, NC and looks like they plan to expand rapidly. http://www.twongo.com uses the tuangou concept for online team buying. I think group buying is a terrific way for people to get deals on things that they would normally pay full price for anyway!

Oh, no franchising for me! I do know the folks at webpiggy but I have different end goals for myself. I’ve been fascinated with the economics on group-buying recently though. It’s something I believe would be easily implemented into a number of sites. What I would like to see would be a “wordpress-like” adaptation of the concept with some sort of “vetting service” to legitimize user-created deals.

THAT would be VERY interesting indeed! But alas, I’m a filmmaker by trade, not an entrepreneur, so if I can’t get the lads at webpiggy to go that route, I’d like to see it tried by someone!

BTW, my name is Dennis, not Herb. Herb was a dorky-but-loveable teacher at my old high school. I have no idea how autocomplete picked that from my name, nor why his name would even come up because I don’t think I’ve ever emailed him, but it made me LOL when I re-read my post and saw my name. It must be a sign to look him up!

I think there is tremendous potential in the social BUYING (not just talking-about-shopping) segment. We all know (and practice) some variation of this… For example, if you shop at Costco, you are already part of a group buying cooperative. The trick is to create a consumer-friendly version that preserves each participant’s independence. That is precisely what I think we’ve done at Revenzy but would love comments and feedback.

Hi Bob: how interesting, I hadn’t thought of CostCo as a group buying cooperative.

I suppose this is partly because there isn’t any personalisation of the demand side: you go to a physical site, you see what is available, you buy (or not). Somebody else has made the buying decison based on what they think the demand is; there’s no opportunity to say ‘I’d like to buy an X’ and invite other people to join your group and request tenders from sellers.

I see Costco as a buying cooperative where the members have delegated the product selection to the organization.

Revenzy works on the auction principal. Sellers post a item for sale. If a buyer likes an item, s/he can build a group to bid together. The more people join a group, the less group members can bid per unit and still win the auction. Anyone can also review all items and bid groups and join any “public” group without knowing anyone in the group or being asked.

So at Revenzy, we approach it from “the sell side” because when sellers list an auction, elements like available inventory and shipping terms are known. We are working on adding a “buy side” feature, probably around July, that will support the approach you described.

Hi Alex! I agree that much of this topic is cultural because here in the states, we go with whatever price we see, and there is very little (if any) haggling. We do have other methods of negotiating as you mentioned (coupons, auctions), but typically are not overly-aggressive in either. However, there are instances in auctions where it’s almost expected to be aggressive and get the bidder to the best suited price.

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